Canada Country Risk Report

Published 22 July 2015 | Quarterly

  • 42 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Canada Country Risk Report

Core Views

  • There is a high likelihood of a coalition government being formed after this year's federal general election, after a surge in support for the NDP.

  • Lower investment in the energy sector will lead to weaker average real GDP growth over the coming years, particularly in the absence of higher manufacturing activity.

  • The prospect of a technical recession and below-target inflation suggest that the Bank of Canada is not done with monetary easing. We see another 25bps interest rate cut to 0.50% this year.

Key Forecast Changes

  • No major forecast changes have been made this quarter.

Key Risks To Outlook

  • High household leverage and continued housing price growth could lead to a crash in the real estate sector and trigger a recession.

  • Negotiations with Iran could breakdown and sanctions remain in place, putting upside risks to our oil price outlook, which in turn could pave the way for higher investment in the energy sector and a stronger export performance.

Macroeconomic Forecasts (Canada 2013-2016)
Indicator 2013 2014e 2015f 2016f
National Sources/BMI
Real GDP growth, % y-o-y 2.0 2.5 1.5 1.8
Nominal GDP, USDbn 1,812.3 1,763.8 1,586.9 1,668.7
Consumer price inflation, % y-o-y, eop 1.2 1.5 1.6 2.0
Exchange rate CAD/USD, eop 1.06 1.16 1.28 1.25
Budget balance, % of GDP -1.0 -0.7 -0.4 0.1
Current account balance, % of GDP -3.0 -2.1 -1.6 -1.4
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
NDP Surge At Polls Strongly Favours A Coalition Government
8
TaBLE: POLITICAL OVERVIEW
8
Long-Term Political Outlook
10
Strong Foundation, But Some Challenges From Within
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Low Growth Outlook Amid Depressed Investment Levels
14
table : Macroeconomic Forecasts
14
table : Average Oil Price Forecasts (USD/bbl )
14
table : Private Consumption Forecasts
16
table : Government Consumption Forecasts
16
table : Fixed Investment Forecasts
17
table : Net Exports Forecasts
17
Balance Of Payments
18
External Funding Requirements Will Rise
18
table : TRADE IN GOODS FORECASTS
18
table : CURRENT ACCOUNT BALANCE FORECASTS
18
table : CAPITAL & FINANCIAL ACCOUNT BALANCE
20
table : TOP 5 GOODS IMPORTS IN 2014
21
table : TOP 5 GOODS EXPORTS IN 2014
21
table : EXTERNAL COMPETITIVENESS INDICATORS
21
Exchange Rate Policy
22
CAD: More Depreciation From Low Oil Prices And Rate Cut
22
Table : BMI Currenc y Forecast
22
Monetary Policy
23
BoC Not Done With Easing
23
table : Inflation And Interest Rate Forecasts
23
Chapter 3: 10-Year Forecast
25
The Canadian Economy To 2024
25
Structural Factors Will Constrain Growth
25
table : LONG-TERM MACROECONOMIC FORECASTS
25
Chapter 4: Key Sectors
27
Pharmaceuticals & Healthcare
27
table : Pharmaceutical Sales , Historical Data And Forecasts
28
table : Healthcare Expenditure Trends , Historical Data And Forecasts
29
table : Government Healthcare Expenditure Trends , Historical Data And Forecasts
29
table : Private Healthcare Expenditure Trends , Historical Data And Forecasts
29
Telecommunications
30
table : Telecoms Sector - Historical Data & Forecasts
31
Other Key Sectors
33
Table : Oil and Gas Sector Key Indicators
33
Table : Defence and Securit y Sector Key Indicators
33
Table : Infrastructure Sector Key Indicators
33
Table : Food and Drink Sector Key Indicators
34
Table : Autos Sector Key Indicators
34
Table : Freight Key Indicators
34
Chapter 5:BMI Global Macro Outlook
35
Global Outlook
35
Event Risk Mounting But Manageable
35
Table : Global Assumptions
35
Table : Developed States , Real GDP Growt H, %
36
Table : BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
36
Table : Emerging Markets , Real GDP Growth , %
37

The Canada Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Canada. It is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market.

An influential new analysis of Canada's economic, political and financial prospects through end-2019, just published by award-winning forecasters, BMI Research.

Key Uses

  • Forecast the pace and stability of Canada's economic and industry growth through end-2019.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the operating environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Canada's country risks against regional peers using BMI's country comparative Risk Index system.
  • Evaluate external threats to doing business in Canada, including currency volatility, the commodity price boom and protectionist policies.

The Canada Country Risk Report by BMI Research includes three major sections: Economic Outlook, Political Outlook and Key Sector Outlook.

Economic Outlook:

How will the Canada' economic policy-making and performance impact on corporate profitability over 2015-2019?

BMI provides our fully independent 5-year forecasts for Canada through end-2019 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Canada Country Risk Report features BMI's forecasts with supporting analysis for 2015 through to end-2019, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Index system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector obligations).
  • Global Assumptions - forecasts for each year to end-2019 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Canada and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Canada, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Canada over the next 5-years?

BMI's Canada country Risk Index evaluates the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Canada Market - Political Strengths, Weaknesses, Opportunities and Threats facing Canada.
  • Political Stability and Risk Assessment - BMI's Risk Index assesses explicit short- and long-term risks to political stability; latest positioning and trends for Canada's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.
  • Long-Term Political Outlook BMI examines the structural risks to the stability of Canada’s political system and the dominant public policy issues likely to affect decision-makers, and outlines scenarios for how the state could evolve in the medium to long term.

Key Benefits

  • Benchmark Canada's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Key Sector Outlook*

Which industry sectors in Canada will grow fastest, and where are the major investment opportunities in the market?

BMI identifies investment opportunities in Canada's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry, including recent sector developments and major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2015-2019, using BMI's proprietary industry modelling technique, which incorporates key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across and within each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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